New York (CNNMoney) - The economy is improving, the Federal Reserve said Wednesday, but not enough to warrant higher interest rates for at least two-and-a-half more years. The central bank indicated that it expects to keep the federal funds rate near historic lows until late 2014 - an extension from the Fed's original pledge to keep rates low through mid 2013.

The "economy has been expanding moderately, notwithstanding some slowing in global growth," the Fed said in a statement Wednesday.